"Competitive Bidding Update"

Two Years Later, CMS Still Holds Labs’ Competitive Bid Documents

IF ACTIONS SPEAK LOUDER THAN WORDS, then the federal government sends a clear message by its repeated refusal to return bidding documents to laboratories involved with the now-defunct Medicare Clinical Laboratory Services Competitive Bidding Demonstration project.

That’s because, more than two years after a federal judge in San Diego made a ruling that stopped the federal Centers for Medicare & Medicaid Services (CMS) from proceeding with the laboratory services competitive bidding demonstration project, the government still refuses to return the bid documents.

THE DARK REPORT has learned that negotiations are taking place between lawyers for the federal government and lawyers representing the plaintiff labs in San Diego that participated in the competitive bidding demonstration project two years ago. The two sides are negotiating over whether CMS should return, destroy, or do something else with the bidding documents the labs submitted on February 15, 2008. (See TDR, April 15, 2010.)

CMS Seeks to Dismiss Case

The labs that sued in federal court to challenge the Medicare Clinical Laboratory Services Competitive Bidding Demonstration Project are Sharp Healthcare, Internist Laborator y, and Scripps Health. Other plaintiffs in the lawsuit are the American Association of Bioanalysts (AAB), and the American Clinical Laboratory Association (ACLA).

Last month, on March 18, Judge Thomas J. Whelan of the U.S. District Court for the Southern District of California, denied a motion by CMS to dismiss the amended complaint originally filed by the plaintiff labs to challenge CMS’ retention of the bid information from three San Diego labs and to dissolve the preliminary injunction against CMS that the labs had won in April 2008. The preliminary injunction prevented CMS from proceeding with the bidding project. Also in 2008, Congress repealed the competitive bid demo by statute.

CMS Retains Lab Bid Papers

Prior to Judge Whelan’s ruling on March 18, one of the plaintiffs’ attorneys told THE DARK REPORT that “federal lawyers are taking a hard line on this case so far. Even though there is a new administration in place at CMS, we speculate that they may not like the precedent represented by this case, since it could potentially establish terms or limits on their discretion to use this kind of information.”

CMS officials suffered two major set-backs in their efforts to introduce competitive bidding for laboratory testing services. First, as noted above, the federal judge’s ruling in 2008 effectively stopped the demonstration project from moving forward. Then, in the summer of 2008, Congress repealed the mandate for the laboratory competitive bidding demonstration as part of the Medicare funding legislation.

Yet despite both setbacks, Medicare officials refuse to return the laboratories’ bidding documents. Is this a sign of the substantial value that such confidential cost and price information has for Medicare officials? At this point, there is no evidence or public comment that would indicate CMS has used any of the bid information for any purpose.

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